Sunday, February 15, 2009

Colleen Campbel used her column this week to criticize President Obama for what she saw as "amateurism". Yet instead of scalpel-sharp analysis, she instead offered spitballs.

So what-in the wake of the passage of Obama's top legislative priority, the largest stimulus bill of its kind, ever-does she offer as evidence of this presumed amateurism? An overly verbose press conference and Obama's decision to accept responsibility for the mistakes of his staff.

Parker dutifully ignores the singular issue which has dominated the world of media talking heads, radio jocks and writers and bloggers everywhere.

President Obama asked that there be a stimulus bill on his desk by the first week of February. Instead the bill has arrived in the middle of February.

That's not a bad start considering it's nearly $800 billion price tag makes it the largest stimulus ever (the Wa Po calculated it a 5% of GDP versuss 2% for Roosevelt's New Deal).

Despite its sheer size, the bills passage is also remarkable for the lengths to which Obama reached out to try and draw Republican support. Nearly $300 billion in tax cuts were included, and cuts were made to social programs and relief funding for states in an effort to include Republican suggestions. An open hand which was smacked away by the Republican leadership and-minus three Senators (Collins, Snowe, Specter)-Congressional Republicans.

Republican commitment to attacking the stimulus bill, regardless of both reality and necessity, is impressive.

In today's St. Louis Post-Dispatch, Missouri Representative Roy Blunt (R-Springfield) criticized the bill saying some of the spending wouldn't occur for a decade. Blunt, along with every other Republican in the House voted against the stimulus bill.

Blunt should have checked with the Congressional Budget Office, the office that provides estimates of spending, debt and other budget impacts. It released a report (pdf) on Saturday showing the majority of the stimulus would be released by 2010, about 18 months.

Update: It appears Blunt's office did see the report. A press release on his website adds a note confirming that the bill would provide the short-term stimulus sought by the President. It tosses in a caveat, however, saying the CBO determined there might be a potential for a negative impact beginning after 2014.

The negative impact the CBO estimates in this report (This is the only recent report referring to a 2014 turning point. Blunt's office declines to indicate which reports it is getting its information from) is a potential 0 to 0.2 percent negative impact after 2014. Meaning there could be no negative impact at all. The report only looks at the earlier proposal, not the final bill passed this weekend.

The CBO attributes this to potential "crowding out" of private investment. It balances this prospect by noting that much of the government-financed investment in areas such as education and infrastructure could improve long-term output, thus the providing continued positive growth.

That said, the potential for a slight drag 5 years down the road is nothing compared to an imminent crash.

Representative John Boehner, chief Republican in the House, criticized the stimulus bill-which now awaits President Obama's signature-as "spending, spending and more spending."

This sits neatly with other Republican criticisms of the bill that used visual aids to describe how large a stack of money this represents.

It was, perhaps, unintended comedy. Given that this was by definition a spending bill, and that the trillion-dollar plus shortfall in consumer spending expected by economists over the next year ($2.9 trillion over the next three years) necessitated the government stopgap in order to try and help keep business activity up, the Republican comments were less criticism than descriptions.

Local Republican Representative Todd Akin explained his no vote this way, "“This is spending beyond any we’ve ever seen. The question is: How far can we push ourselves into debt?”

While it is true that we should concern ourselves with how the country will eventually pay the debt, it is hard to see how we would be able to make any dent even in the existing debt (which at the end of the 1990's was on the decline, until the recent administration took office. Much of whose war-related spending remains off the books, so the debt figures are likely to end up far higher) with an economy that has completely crashed. With no business activity, there is no tax revenue and thus no debt payments.

To be fair, this is a lot of money, $787 billion is no small change. Yet in a country that had a $14 trillion dollar economy in 2008, but has just shed 3 million jobs in the last few months and seen businesses cutting back left and right as the recession deepens, it may be a small price to pay to keep us away from the tipping point.